Smart holiday shopping

’Tis the season for swiping debit cards, handing over credit cards, and counting out cash. (123 RF)

’Tis the season for swiping debit cards, handing over credit cards, and counting out cash. Are you prepared for the holiday shopping marathon, or do you usually wind up flat-broke in January?

Raymond Chun, senior vice-president of Everyday Banking and Payments with TD Canada Trust, says the most common mistake is not having a budget for your holiday shopping.

“Overspending is what gets a lot of people into financial trouble at the end of the season,” says Chun. “If you take time at the beginning, and make a budget of how much you can afford, you can avoid a lot of the pitfalls.”

Paying with cash -- or with your debit card -- is a smart way to keep your budget in check. Chun says if you’ve never gotten into the habit of saving up for holiday shopping, it’s never too early to start planning ahead for next year.

“I always tell people to start saving now for next year’s holidays,” says Chun. “If you can set up an automatic transfer to a savings account, then you won’t have to rely on credit next season.

“When people use their credit card too much, not only have they spent a lot, but they also have the interest. If you plan ahead and figure out how much you need to save, you’re using ‘your’ money instead.”

Chun says shopping malls can be dangerous places for your wallet, because you’re bombarded by gift options -- each better than the last.

“You can get caught up in impulse buying, and I’m guilty of this myself,” says Chun. “You have to find ways to catch yourself and say, ‘Hey, I only have $1,000 for presents, and buying that will put me over budget.’ You have to self-govern.

“Remember that it’s not all about the gift -- it’s the thought around it that people appreciate.”

Don’t forget to budget in the cost of getting those gifts to loved ones living far away.

“A lot of people are spending a fortune on postage costs, but you can save money -- and time -- by buying items online and having them shipped directly to the recipient,” says Chun. “It’s little things like that that really add up.”

When the season is over and you’re dealing with the January statements, Chun says it’s crucial to face up to your spending and deal with the bills.

“It’s amazing how much people pay in late fees and interest, and that’s especially hard if you’re on a tight budget,” says Chun. “The reality is that those bill need to be paid.”

If the damage is done and you’re worried about credit card debt, Chun suggests making an appointment with a financial advisor at your bank.

“You don’t want to have debt owing on high-interest credit cards, so banks have ways to consolidate your debts with a more favourable interest rate. It will help with cash flow, and help you pay off your debt in a more timely way. For most customers, it’s a very easy process.”